Learning Centre

Super is a tax effective way to save for retirement.

Your employer makes contributions into a super fund or retirement savings account (RSA) on your behalf, whilst you are employed, so that this money can be paid to you when you reach preservation age and retire from the workforce. It is compulsory for employers to contribute super on behalf of all employees if they are under 70 years of age and over 18 years of age, or work more than 30 hours a week if you are under 18 years of age, and earn on or above $450 in a calendar month. Compulsory employer contributions are called Superannuation Guarantee (SG) and are currently set at 9% of your ordinary time earnings. Contributions must be paid to a complying fund. If you are paid under an Award, your employer may be required to contribute super at the award level, regardless of your age and earnings.

To help increase your retirement savings, the government established the Government Co-contribution. For non-concessional contributions made since 1 July 2004, the government will provide a co-contribution to your LESF account if you meet eligibility requirements below.

You must:

• make non-concessional contributions to your LESF account (salary sacrifice contributions are not eligible);
• have a total income of less than 61,920 per annum (2009/10);
• be less than 71 years of age at the end of the year of income;
• not hold an eligible temporary resident visa at any time during the income year; and
• lodge a tax return for the financial year.

The income limits for the government co-contribution have been indexed. From 1 July 2009 total income is the sum of your assessable income, reportable fringe benefits and salary sacrifice contributions. Before 30 June 2009 salary sacrifice contributions were not included in the definition of total income for this purpose.

Generally the Government will pay your co-contribution into the fund you made your co-contribution to. However, to ensure your co-contribution is paid into LESF, complete a Superannuation Fund Nomination Form (NAT8676). Copies can be downloaded from the ato website advised below. The Government Co-contribution scheme is also available to the self-employed as long as you meet the eligibility criteria including earning 10% or more of income from carrying on a business, eligible employment or a combination of both. The Co-contribution works on a sliding scale, relative to how much you contribute and how much you earn.

The Australian Tax Office (ATO) has a website link to a Government Co-contribution calculator, which you can use to work out the Government Co-contribution you could be eligible to receive, based on information you provide about your income and personal super contributions for the relevant financial year. To calculate the amount you may be eligible to receive from the Government visit www.ato.gov.au

You can combine your super and reduce your fees by transferring super from other funds into LESF. Simply complete an LESF Transfer Form and return it to LESF and we will do the rest. You can also transfer any lost super from the ATO to LESF. The ATO's online search tool SuperSeeker, is specifically designed to find Australian's lost super so log onto the ATO website at www.ato.gov.au and let them match you with your lost super.

LESF returns all profits to members, maintains a low fee structure and does not charge any fees for you to transfer other super into your LESF account. You may wish to obtain professional financial advice before making a decision.

LESF is required by law to ask for your TFN. Collection of your TFN is authorised by the Superannuation Industry (Supervision) Act 1993 and the Privacy Act 1988. The use of TFN’s is restricted by law and, if you elect to provide your TFN, it will only be used in respect of your superannuation arrangements.

For example:

• Calculating tax on benefits to which you may become entitled.
• Finding and identifying your superannuation benefits when other means of identification are insufficient.
• For the purpose of administering the superannuation surcharge.
• Unless you indicate otherwise in your Application for Membership, your TFN will be provided to another superannuation fund if your benefits are transferred or rolled over from this Fund. Your TFN will be kept confidential at all times. If you elect not to provide your TFN;
• You may pay more tax than you have to on any benefit you receive.
• It may make it difficult to amalgamate multiple superannuation accounts.
• It may not be possible to identify your benefit and transfer or pay it if the other identification we have is incorrect (e.g. wrong name or address).
• LESF cannot accept your non-concessional contributions. Such contributions must be refunded within 30 days of receipt if we do not have your TFN. These consequences may change in the future as a result of legislative change. Your TFN is confidential and you are under no obligation to provide it to LESF. It is not an offence if you do not provide it.

No-TFN Tax

If if you do not provide your TFN to LESF, the Trustee is required to deduct, at 30 June each year, an additional 31.5% tax from all employer contributions received. This means that your employer contributions will be taxed at 46.5%. Provided you are still a member of LESF, you may provide your TFN to the Fund up to three years later and we will arrange to have this additional tax refunded.

Therefore it is very important for you to provide us with your TFN when you join LESF

If your account is less than $1,000, 12 months after leaving employment with an LESF participating employer, your LESF superannuation balance may be transferred to our nominated Eligible Rollover Fund (ERF), the National Preservation Trust (NPT). With the NPT, administration fees cannot exceed investment earnings, and they will release benefits under the same conditions as superannuation funds.

You will cease to be a member of LESF and will become a member of NPT, and will be subject to the governing rules of the NPT. The earning rates of the NPT will be applied to your interest and you will not have any insurance cover. The NPT can be contacted on 1800 331 210 or at PO Box 6003, Woollongong NSW 2500.